Airline Code [DLH]
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Tags :Continental Europe, Lufthansa, environment, ETS, Emissions Trading Scheme
In 2008, the European Parliament voted to include airline activities in the EU Emissions Trading Scheme (ETS). Besides having to prudently manage the current effects of the global credit crunch in their industry, airlines are now facing a new challenge, which should not be underestimated.
They will be required to reconcile the aviation industry’s responsibility for the environment with the strategic and financial implications of the forthcoming emissions trading scheme. The ETS came about as a consequence of the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Control, which for the first time committed the international community to adopt binding targets and create tools to start tackling climate change. The aim is now for airlines also to implement the reduction in CO2 emissions by 20% by 2020 from the 1990 levels. The ETS guideline applies to all flights to, from and within Europe. Action is urgently needed, since in Aug-09, long before certificate trading officially starts, airlines must submit a monitoring plan to the respective European authorities. The European Commission published the list of relevant carriers and their administering member states in mid-February.
ETS will create major financial burdens for the industry
The European Emissions Trading Scheme will have significant financial implications for airlines in the future. The costs cannot yet be estimated precisely and will depend on the price development of emissions certificates, which will be influenced by legislative and market parameters.
A certificate must be obtained for each tonne of CO2 emitted. For 2012, the large network carriers expect emissions costs to soar to the triple-digit million euro range. Moreover, the introduction, preparation and execution of the processes needed for ETS will incur further administrative costs.
ETS will also impact airlines’ earnings, especially those of European airlines. Emissions costs will have to be partially offset by fares - and a decline in demand, particularly in price-sensitive market segments, looks likely. Moreover the ETS will turn out to be a market entry barrier to Europe, especially for small international airlines. Add to that the shift in international traffic to non-European hubs in the foreseeable future as well as competitive disadvantages for European hubs. This all will result in a distortion of competition.
The introduction of ETS will limit airlines’ available funds for making investments and at the same time will increase the pressure on them to migrate to modern, more efficient technologies in order to reduce emissions in an expanding market environment. This poses a major challenge for decisionmakers at airlines.
Airlines are committed to acting now - EU directive is binding
There is no way around the European Emissions Trading Scheme. It is obligatory for all airlines operating flights to or from Europe. The timeframe in 2009 is already very tight. The airlines must structure their organisation accordingly and allocate responsibilities for the obligatory data monitoring, reporting and verification processes.
Airlines that do not create the necessary foundations and do not obtain sufficient certificates for their fleet risk additional EU fines of 100 euros for every tonne of CO2 emitted.
Emissions Trading Services support from Lufthansa Consulting
Lufthansa Consulting is able, with immediate effect, to support all affected airlines with its new product, Emissions Trading Services. The German aviation experts have developed a well-founded consulting solution. Comprising three phases, it will help carriers to fulfil the ETS requirements and implement them within the stipulated time.
ETS Impact Assessment Phase:
Lufthansa Consulting will conduct an ETS impact assessment in which our experts will analyse the existing monitoring tools and fuel/emissions data as well as the financial, strategic and administrative impact of ETS. Moreover, Lufthansa Consulting‘s experts will identify the potential for reducing fuel consumption and emissions. Our results will be compiled in a comprehensive ETS impact assessment report within one week.
MRV (Monitoring, Reporting, Verification) Compliance Cycle Phase:
Lufthansa Consulting will help its clients to comply with ETS regulations. Part of our service will be to create a monitoring and reporting plan as well as an annual emissions report, to conduct a dialogue with the relevant authorities, to design an emissions monitoring process and contract a verifier. All these measures will be necessary for airlines operating flights to, from and within Europe. In addition, Lufthansa Consulting will help its clients to develop a certificate trading strategy. This phase will take between two and four weeks, depending on the client’s needs.
Implementation Planning Phase:
Lufthansa Consulting experts will help its clients to enforce the organizational integration of the ETS processes, including allocating responsibilities, training staff and adjusting operational procedures. The ETS implementation plan can be conducted in two to four weeks.
You can use your competitive advantage to lower your emissions costs and benefit from our Emissions Trading Services. Working with you, we will develop an action plan to reduce your fuel consumption and emissions and will support you in creating a comprehensive program to reduce your long-term costs. Lufthansa Consulting will help you to find the best solutions and make the right decisions in terms of ETS. (c) Centre for Asia Pacific Aviation. Date posted: 20-Mar-09
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Lufthansa comments on ETS and its economic impact 
